Business Week says this is an open secret on Wall Street: Prime brokers with access to information on big trades are tipping off their other traders and their hedge fund clients, allowing them to do a bit of front-running. Does this really go on? Well, it's going to be hard to prove. I am sure it goes on to an extent, especially if the prime brokerage operation and a hedge fund are owned by the same company. The people who are really suspicious are mutual funds. They stand to lose a lot as the bid and ask moves against them subtly but enough to really affect their P&L over the long-term. You have got to think that buyside players with real clout have made this an issue. If it goes on. Do prime brokers really have advance word on mutual fund orders?
Our take on this news: Duh!! Who didn't know this? The financial media does a terrible job reporting and looking into the specifics of the financial industry. CNBC is the worst!!!
Monday, July 2, 2007
Bear Stearns Blogs about hedge fund crisis
Richard Marin, the head of the Bear Stearns unit that ran its hedge funds, is a man in the spotlight. How does he deal with it? In part by writing a blog (invite only now), which the New York Times noticed and wrote about. Some choice entries: On June 23, he wrote he was "trying to defend Sparta against the Persian hordes of Wall Street." And "nothing like a good dog fight 24X7 for a few weeks to remind you why you chose the life you chose." And "the good news is that after two embattled weeks both I and my loyal staff are still standing to fight another day." His work also included some brief movie reviews. The Times chides him for taking in Mr. Brooks during the crisis over its two ailing hedge funds. Not sure how this went over with his boss. The blog was restricted to invited guests soon after it hit the press.
Our take on this news: Do we need to be blogged by an insider whose only interest in to manipulate the inquirers. We wouldn't believe a word his says!!
Our take on this news: Do we need to be blogged by an insider whose only interest in to manipulate the inquirers. We wouldn't believe a word his says!!
GLG Settles WITH SEC on Short Sales
GLG Partners Agrees to $3.2 Million Fine to Settle SEC Charges of Illegal Short Selling
London-based hedge fund GLG Partners LP will pay more than $3.2 million to settle charges that it made illegal stock trades in connection with 14 public offerings, the Securities and Exchange Commission said Tuesday.
The SEC said the company made more than $2.2 million in profits over a two-year period -- from July 2003 to May 2005 -- in illegal short sales.
Short selling involves borrowing stock from a broker and selling it immediately, with the hope of buying it back for a lower price and returning it to the broker. The profit is the difference between the price at which the stock was sold and the cost to buy it back, less any commissions and expenses.
The agency said GLG's actions violated the Securities and Exchange Act, which prohibits covering certain short sales with securities obtained from a public offering. Specifically, the law says companies may not sell such securities five business days prior to the pricing of a public offering because it could "artificially distort" the security's market value.
Although GLG did not admit or deny SEC's findings, the hedge fund agreed to a cease-and-desist order and to pay back more than $3.2 million, including profits gained, interest and civil penalties.
The company will also adopt and implement policies and procedures to comply with SEC rules, provide training to employees and designate a senior-level employee to oversee compliance.
"Foreign-based hedge funds that trade on the U.S. markets cannot turn a blind eye to compliance with the U.S. federal securities laws," Antonia Chion, associate director of SEC's enforcement division, said in a statement.
The agency's announcement comes a day after GLG said it will sell itself in a $3.4 billion reverse takeover with Freedom Acquisition Holdings Inc., a blank check company that is established to enter into a merger or acquisition.
The combined company will be called GLG partners and will trade on the New York Stock Exchange.
The deal, which is subject to Freedom shareholder and regulatory approval, is expected to close early in the fourth quarter.
Our take on this news: GLG got off quite easy. How about penalize them from doing business in the U.S. marketplace for awhile?
London-based hedge fund GLG Partners LP will pay more than $3.2 million to settle charges that it made illegal stock trades in connection with 14 public offerings, the Securities and Exchange Commission said Tuesday.
The SEC said the company made more than $2.2 million in profits over a two-year period -- from July 2003 to May 2005 -- in illegal short sales.
Short selling involves borrowing stock from a broker and selling it immediately, with the hope of buying it back for a lower price and returning it to the broker. The profit is the difference between the price at which the stock was sold and the cost to buy it back, less any commissions and expenses.
The agency said GLG's actions violated the Securities and Exchange Act, which prohibits covering certain short sales with securities obtained from a public offering. Specifically, the law says companies may not sell such securities five business days prior to the pricing of a public offering because it could "artificially distort" the security's market value.
Although GLG did not admit or deny SEC's findings, the hedge fund agreed to a cease-and-desist order and to pay back more than $3.2 million, including profits gained, interest and civil penalties.
The company will also adopt and implement policies and procedures to comply with SEC rules, provide training to employees and designate a senior-level employee to oversee compliance.
"Foreign-based hedge funds that trade on the U.S. markets cannot turn a blind eye to compliance with the U.S. federal securities laws," Antonia Chion, associate director of SEC's enforcement division, said in a statement.
The agency's announcement comes a day after GLG said it will sell itself in a $3.4 billion reverse takeover with Freedom Acquisition Holdings Inc., a blank check company that is established to enter into a merger or acquisition.
The combined company will be called GLG partners and will trade on the New York Stock Exchange.
The deal, which is subject to Freedom shareholder and regulatory approval, is expected to close early in the fourth quarter.
Our take on this news: GLG got off quite easy. How about penalize them from doing business in the U.S. marketplace for awhile?
A second Bear Stearns fund to be bailed out?
Bear Stearns' deal to bail out its High-Grade Structured Credit Fund with a $3.2 billion infusion led to concerns that the second troubled fund was due for a similar parental bailout. While the Bear fund is negotiating with lenders to avoid a collapse of the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund, at least one big-name analyst--Guy Moszkowski of Merrill Lynch--has told his clients that he does not expect another big infusion. That would be good news. Moszkowski reiterated his buy recommendation, noting that it is really cheap compared to peers. The bet now would be that the hedge fund ills are contained. There is another view that holds that Bear Stearns might make a good acquisition target right now.
Our take on this news: Tick... tock... tick... tock... tick... tock... waiting for this and other funds to collapse.
Our take on this news: Tick... tock... tick... tock... tick... tock... waiting for this and other funds to collapse.
SEC Website shows Companies on Terror List
SEC Web Site Shows Companies With Activities in Countries on State Dept. Terrorism List
The government has launched a Web site that allows investors to track whether companies have business interests in countries the U.S. designates as "state sponsors of terrorism."
The Securities and Exchange Commission on Monday introduced the site, which links to information from the companies' most recent annual reports that reference any of the five listed countries.
Iran has the most companies listed at 43, followed by Sudan at 32, Cuba with 22, 19 in Syria, and five in North Korea.
Only two companies -- U.K.-based HSBC Holdings PLC, Europe's largest bank, and Credit Suisse Group, Switzerland's second-largest bank -- had business activities in all five countries. But numerous firms, including Nokia Corp., Siemens AG and Total SA, disclosed activities in multiple countries.
"No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state," SEC Chairman Christopher Cox said in a release.
Federal law already requires companies to report on any material activities in a country on the Secretary of State's terrorism list and the SEC is now making that information "readily accessible to the investing public," Cox said.
But the existence of a disclosure does not mean that the company directly or indirectly supports terrorism or is otherwise engaged in any improper activity, the SEC said.
The site can be accessed on the "Investor Information" section of the SEC's home page at http://www.sec.gov.
Our take on this news: We believe longtime Wall Street bulldog and wealthy Minneapolis financier Richard Christenson had been advocating to do just this for years! What took so long to do this?
The government has launched a Web site that allows investors to track whether companies have business interests in countries the U.S. designates as "state sponsors of terrorism."
The Securities and Exchange Commission on Monday introduced the site, which links to information from the companies' most recent annual reports that reference any of the five listed countries.
Iran has the most companies listed at 43, followed by Sudan at 32, Cuba with 22, 19 in Syria, and five in North Korea.
Only two companies -- U.K.-based HSBC Holdings PLC, Europe's largest bank, and Credit Suisse Group, Switzerland's second-largest bank -- had business activities in all five countries. But numerous firms, including Nokia Corp., Siemens AG and Total SA, disclosed activities in multiple countries.
"No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state," SEC Chairman Christopher Cox said in a release.
Federal law already requires companies to report on any material activities in a country on the Secretary of State's terrorism list and the SEC is now making that information "readily accessible to the investing public," Cox said.
But the existence of a disclosure does not mean that the company directly or indirectly supports terrorism or is otherwise engaged in any improper activity, the SEC said.
The site can be accessed on the "Investor Information" section of the SEC's home page at http://www.sec.gov.
Our take on this news: We believe longtime Wall Street bulldog and wealthy Minneapolis financier Richard Christenson had been advocating to do just this for years! What took so long to do this?
Can an equity firm run a mutual fund?
The news that Nuveen was purchased by private equity firm Madison Dearborn Partners is yet another example of how private equity funds are increasingly going after financial services funds. Nuveen, a highly recognizable brand, says this will allow them to attract and retain talent and accelerate their product and service development plans. It will also make some people very wealthy. But you have to wonder if there's a lot of synergy between a private equity firm and mutual fund company. Madison Dearborn was willing to pay a big 20 percent premium. So it sees something. But what? The company will be loaded up with additional debt, and you have to wonder if the target will really have the wherewithal to finance the major expansion people are hoping for. It may be that mutual fund returns won't be good enough for a private equity company. But we'll see.
Our take on this news: This will be one of Madison Dearborns few mistakes. Excellent equity firm with excellent returns but this will turn out to be a blunder for them and its investors.
Our take on this news: This will be one of Madison Dearborns few mistakes. Excellent equity firm with excellent returns but this will turn out to be a blunder for them and its investors.
SEC probes into Bear Stearns hedge fund.
This is not surprising: The SEC is looking into the well-covered woes of Bear Stearn's troubled credit-oriented hedge funds. Business Week Online reports that regulators are wondering why and how the firm was able to restate the losses of one fund in April. At first, the firm said the losses were in the 6.5 percent range. Three weeks later, according to the magazine, the losses were restated to 19 percent. This is a huge problem. And many think that the reputation of CEO Jimmy Cayne is on the line. It's no surprise that Bear Stearns has had problems both in its proprietary funds and in its prime brokerage operations. This will only compound the issues. There are likely other funds in similar straights. It's fair to say that more fund blow-ups will bring more regulatory interest. You can sense the angst on the part of regulators. Their reputations are also on the line, in a way.
Our take on this news: Where was the SEC to begin with to oversee their behavior in the beginning?
Our take on this news: Where was the SEC to begin with to oversee their behavior in the beginning?
What to make of the Bear Stearns meltdown.
This is not another Long-term Capital Management is it? On the surface, it sure doesn't seem that way. As far as we know, there was no involvement by the Federal Reserve Board or any public officials behind the $3.2 billion cash infusion that Bear Stearns will provide its two troubled hedge funds. So in a sense, the woes of Bear's High-Grade Structured Credit Strategies fund and the High-Grade Structured Credit Strategies Enhanced Leverage Fund (the one in really bad shape) actually signifies some progress. But there are worries that perhaps this is the tip of something larger. There are some dependencies and exposures, perceived or real. Note the cancellation of Bear's Everquest IPO, which bought some subprime exposure from the two funds. You have to wonder what will happen to the entire CDO market. It may well be that others are in the exact same position.
Our take on this news: Who cares about Bear Stearns? If you believe in the free-markertplace, let the market take care of itself. Let Bear Stearns go under entirely!
Our take on this news: Who cares about Bear Stearns? If you believe in the free-markertplace, let the market take care of itself. Let Bear Stearns go under entirely!
How the rich feel about mutual and hedge funds.
If you're rich, the financial services would like to know how you feel about mutual funds and a host of alternative investments. There have been several attempts to figure it out. A study by Prince and Associates, for example, suggests that the uber-rich scorn mutual funds and even exchange traded funds. In fact, they found that the richest do not invest in mutual funds at all, preferring hedge funds and direct investments in startups. dailyii.com, however, notes that the finding is at odds with a survey by the Spectrum Group that found even the wealthy don't truly "get" hedge funds, and that less than 10 percent owned one. These are not necessarily inconsistent. The top 10 percent could easily account for the bulk of individual money invested with hedge funds. But to complicate matters, Advisor Perspectives has found that, according to their database anyway, the very wealthy continue to hold mutual funds. It all comes down to how you slice the data. Interesting.
Our take on this news: Survey after survey shows what they want. There is NO pattern in the way individuals invest their funds.
Our take on this news: Survey after survey shows what they want. There is NO pattern in the way individuals invest their funds.
Goldman heading for major crisis?
Liquidity is a huge issue at Goldman Sachs--given its highly leveraged structure. So does it deal with the potentially escalating chances of some sort of market meltdown? Bob Berry, a mathematician from Cambridge University, monitors 18,000 computers that constantly report on various market exposures, setting limits based on prevailing conditions, according to Forbes. Another unit monitors counter-parties for their ability to pay. Another unit assesses the likelihood of disasters along the lines of avian flu or a military attack. And then there is the firm's Fort Knox. Goldman has more than $50 billion in government securities of the U.S. as well as Japan and Germany. That in theory could be converted into cash, enough to keep the firm running for at least three months even if it had no receivables.
Our take on this news: Who didn't know of the crisis? Duh!
Our take on this news: Who didn't know of the crisis? Duh!
More on Bear Stearns fiasco
Is Bear Stearns' 10-month-old High Grade Structured Credit Strategies Enhanced Leverage hedge fund now officially dead? It sure seems that way. The latest is that Merrill Lynch has balked at a plan that would require Bear Stearns to inject up to $1.5 billion into the ailing fund in return for agreements that the likes of JPMorgan, Citigroup and Merrill would not demand further collateral for about a year. Merrill didn't go for it and has put about $800 million in bonds held by the fund at what will likely be firesale prices. So this spells effectively the end of the fund. It does not appear that the Blackstone Group intends to go forward with any plays, if it ever intended to at all. Perhaps we're seeing a shift in power that will play out as other credit-oriented funds hit rocky roads. Lenders will certainly have the upper hand and be in a position to dictate favorable terms going forward. You have to think that big lenders might be considering the collateral positions at other funds with preventative medicine on their minds.
Our take on this news: Let hem go under.
Our take on this news: Let hem go under.
Private equity vs. the shorts
It's odd that short-selling is so popular all of a sudden. Short interest on the NYSE topped 3 percent of shares in May. That's the highest level since 1931. It's gotten so competitive that just finding the shares to borrow is proving very difficult. Some might read this as a classic bull sign. They might be right. Another way to see this is as a sign of a classic bull-bear battle. In this case, according to Business Week Online, the battle pits the many shorts, including individual traders, against many private equity funds out there. My guess is that shorts will end up covering soon enough. Most pure short-sellers have been driven out already. Private equity may push out the fashionable shorts. There will be a market top at some point, which will make some short sellers look good--the ones that survive to that point anyway.
Our take on this news: The shorts deserve to be hit!
Our take on this news: The shorts deserve to be hit!
More on Goldman's hedge fund.
Goldman Sachs' hedge performance has generated some unusual headlines as of late. Now comes news from Financial News Online that inflows to the gilded firm's alternative investment funds amounted to zero in the second quarter. Alternative investment, of course, has been a super success. In 2006, Goldman reported inflows of $32 billion. That came after a terrific performance year. Is this reason to worry? Well, as for the flagship Global Alpha fund, Goldman's CFO David Viniar said that redemptions have been slight. The word is that the fund was down at least 6 percent through May. Last year was a down year--almost 10 percent. Of course, the fund gained 50 percent in 2005. The firm seems to be planning new products that they hope will generate inflows.
Our take on the news: Continue those redemptions and get out of Goldman's fund and every other one you're in!
Our take on the news: Continue those redemptions and get out of Goldman's fund and every other one you're in!
Bear Stearns' problem in hint of what to come?
The saga of Bear Stearns' High Grade Structured Credit Strategies Enhanced Leveraged Fund is worth following--and worrying about. Recall that Merrill Lynch has given the fund a lifeline of sorts by agreeing to delay the sale of $400 million in securities held as collateral in the Bear Stearns fund. A sale, of course, would have effectively spelled the demise of the fund, which had sold off $4 billion in securities in low-rated bonds, many tied to subprime mortgages. The sale was apparently made to meet some margin calls related to short bets that did not pan out. So Bear Stearns has bought itself some more time here. You have to wonder if we're in for more of this kind of intra-bulge bracket bargaining. Bear is not the only one that will face a rough time. There are fears that all this will ripple through the industry. Stay tuned.
Our take on this news: The hedge fund industry isn't just in trouble, it is in serious trouble. There will more situations like this in the future and will require new regulations for the industry to follow. If they folow the new regulations, history shows that the industry violates regulations on a regular basis.
Our take on this news: The hedge fund industry isn't just in trouble, it is in serious trouble. There will more situations like this in the future and will require new regulations for the industry to follow. If they folow the new regulations, history shows that the industry violates regulations on a regular basis.
Tuesday, June 26, 2007
Bear Stearn's a takeover target?
Bear Stearns has been beaten up pretty good this year over its exposure to the subprime implosion and most recently its earnings. But its stock has flagged to the point now that it has a market capitalization in the $17 billion range and trades at just 1.5 times its book value. Breakingviews.com suggests that it might receive some attention as a takeover target. Certainly, Bear Stearns is a powerful Wall Street brand, one that has been upfront about its mortgage woes. You would expect the firm to work through these issues over the next year or so, if not sooner. But at this cheap price, you have to think that a deal is a possibility. That said, who would the suitors be and how would they approach it? Sell off the prime brokerage operation? It's all a bit murky, but you have to think that some bankers have at least thought about it.
Our take on the news: Bear Stearn's is a complete mess, as are numerous other firms. A complete ovehaul and shake-up is needed, as well as company culture.
Our take on the news: Bear Stearn's is a complete mess, as are numerous other firms. A complete ovehaul and shake-up is needed, as well as company culture.
Tender offer making a comeback?
Tender offers have become rare in recent years. But after some arcane rules were clarified, it seems that such offers are making a comeback of sorts. The AP notes that through May, about 15 percent of friendly deals involved tender offers, up more than three times from a year earlier. Is this a good way of making hedge funds and others shut up about a supposedly "undervalued" price by a bidder? Maybe so. Tender offers usually offer speed. One can buy a firm much more quickly than it could if it went via the shareholder approval route. But the tender also puts pressure on shareholders to tender quickly, to avoid missing out on the offer, and locking in gains. That's preferable to to the long arduous route of holding out. Two recent deals, for Laureate Education and Biomet, seem to indicate that tenders can reduce shareholder opposition to deals.
Our take on this news: Nothing will shut up hedge fund managers.
Our take on this news: Nothing will shut up hedge fund managers.
Goldman works hard to avoid conflict
There has been a lot of hand-wringing over the many conflicts that top investment banks have when acting as advisor and principal. The big guns have worked it all out and are enjoying the fruits of both. But that doesn't mean there will not be speed bumps. Breakingviews.com chronicles how Goldman Sachs had to work hard to deal with some perception issues in the U.K. It took some criticism for its conflicted role, which earned local bankers a "spank form Hank," as in then chairman Hank Paulson. He told them to shape up. Their new proactive approach was evident during the New Look auction. It worked hard to clear up confusion about its role, even going so far as to deny rumors that it was putting up a consortium to make competitive bid. In general, the private equity side seems to be deferring to the advisory side.
Our take on the news: Goldman's is a conflict period!!
Our take on the news: Goldman's is a conflict period!!
Big Bear Stearn's in Big Trouble
Just when it seemed like Wall Street's top firms had weathered the subprime storm comes news that Bear Stearns' High-Grade Structured Credit Strategies Enhanced Leverage Fund sank 23 percent as of the end of April 30. According to BusinessWeek Bear Stearns' asset management group has suspended redemptions which has investors upset (to say the least). One apparently has been trying in vain to get his money back since February. The fund got caught on the losing end of a big bet on subprime mortgages. In a June 7 letter, Bear Stearns explained that redemptions were not possible because the "company will not have sufficient liquid assets to pay investors." Ouch! Some $250 million in assets were attempting to flee. It's Hail Mary time for the fund. It still has about $500 million, so a lucky run might be enough to put all this under the bridge.
Our take on this news: This is the tip of the iceberg for an entire industry. Bears is only one of numerous large institutions that are in trouble with their hedge funds.
Our take on this news: This is the tip of the iceberg for an entire industry. Bears is only one of numerous large institutions that are in trouble with their hedge funds.
Bears misses earnings, Goldman beats revenue
Bear Stearns seemed to confirm that all the worrying was justified. It missed estimates by a decent margin, driven by poor results in fixed income trading and a large writedown. There has been a lot of hand-wringing over whether Bear was having a tougher time weathering the subprime mess, which clearly have hit its bond operations. As for Goldman Sachs, it beat the revenue and earnings estimates yet again, albeit by a smaller margin than we're used to. Investment banking and principal investments remain strong. But the growth has slowed from the near impossible growth rates the firm threw up last year. So the early take may be that the industry remains strong but that there are finally signs that meteoric surge is finally starting to moderate. This has been the conventional wisdom for a while, and now it seems more justified.
Our take on this news: Both firms are in trouble and will plumment in value from a long history of fixing the books.
Our take on this news: Both firms are in trouble and will plumment in value from a long history of fixing the books.
Is James Cramer slipping?
Boo-yah! What's going on with Jim Cramer's ratings? According to one measure, his ratings fell to an average of 175,000 viewers in May, a nearly 30 percent drop from the 247,000 a year earlier. In March, he fared much better with an average 255,000 viewers. Interestingly, among those aged 25-54, his average viewership has gone from 88,000 in March to 50,000 in May. For the year, he's down 50 percent. I'm not a TV ratings experts, so I am not sure what's at play here. But you have to wonder if his schtick is getting old. His long-ish article in New York Magazine may be interesting for some. Others might just want the tips. I'd like to see some work on whether the "Cramer effect" is as strong as it once was. That might be a more telling indicator of his popularity, if not his relevance.
Our take on this news: Why should anyone be watching someone who was fined heavily for illegal activity, then given a tv show. Plus, he runs off the mouth about manipulating the viewers for his own benefit! Tell us why anyone should watch or care what he says!
Our take on this news: Why should anyone be watching someone who was fined heavily for illegal activity, then given a tv show. Plus, he runs off the mouth about manipulating the viewers for his own benefit! Tell us why anyone should watch or care what he says!
Rubin supports taxing the carry from funds
Those that favor taxing the carry of hedge funds and private equity funds as income not capital gains got something of a boost recently: Robert Rubin, former Treasury secretary and chairman of the executive committee at Citigroup, has made a case for the change. At a tax-reform conference, he was asked about the issue. He basically said that it seems like alternative investment funds perform a service. They manage other people's money, and that fees for such services ought to be considered income. He also noted, according to The New York Times, that the issue ought to be thoughtfully considered by lawmakers. As of now, it does not appear that the political capital is sufficient to ram through such a change. But the groundwork perhaps is being laid.
Our take on this news: Could the Democrats be anymore anti-growth than this? We don't think so.
Our take on this news: Could the Democrats be anymore anti-growth than this? We don't think so.
Blackstone exec's take on IPO
The Blackstone group initial public offering is turning out to be a well-covered affair. People are really picking apart its registration material. The latest is that Blackstone executives--this is not a surprise--will reap more than $2.3 billion when offering occurs sometime next week. The much-anticipated disclosure offers a glimpse of current compensation as well. CEO Stephen Schwarzman made nearly $400 million in cash last year. He'll make up to $677 million of the $3.9 billion in proceeds from the deal. Historically, the firm's top executives have not taken a salary or bonus, receiving instead from their ownership stakes. Also last year, senior chairman Peter Peterson made $212.9 million, while COO Hamilton James made nearly $100 million.
Our take on this news: Good for Blackstone, they work hard and have tried to maximize value.
Our take on this news: Good for Blackstone, they work hard and have tried to maximize value.
Another stock-picking game in trouble
Cheating on the part of contestants has forced TheStreet.com to cancel the first round of its popular game, Beat the Street, due to possible cheating. The game offered a $100,000 prize. This is the second heavily marketed game that has run into trouble with cheating. Recall that CNBC's contest, which offers a $1 million prize, has also drawn controversy over charges that some contestants effectively traded after hours based on same-day results. CNBC has hired outside investigators to look into the problem. It's unclear exactly what is at issue with TheStreet's game. It's kind of a sad commentary on the willingness of rank and file investors to bend the rules, if that is what happened. Ethical lapses are not limited to the Enrons of the world.
Our take on this news: As if we didn't think the TheStreet.com could pull off anything honest in the first place. Should anyone be surprized about this? Not us!
Our take on this news: As if we didn't think the TheStreet.com could pull off anything honest in the first place. Should anyone be surprized about this? Not us!
SORRY! WE HAD TECHNICAL DIFFICULTIES! :(
Sorry about the delay in posting blogs. For some reason we had technical difficulties collecting our information from one another and couldn't fairly post our consensus, so we chose not to post anything until the situation was resolved. We're back and hopefully this won't happen again.
Our take on this news: GOOD! And it better not happen again!
Our take on this news: GOOD! And it better not happen again!
Friday, June 8, 2007
Fewer opportunites for hedge funds
Is the hedge fund industry being overwhelmed with new cash? Well, there's a case to be made that there just aren't enough investment ideas to sustain all this money. So what you end up with are more hedge funds that are all too correlated with main asset class indexes, which defeats the purpose. In a letter to clients, Ray Dalio, of Bridgewater Associates, notes that over the last 2 years, hedge funds were 60 percent correlated with the S&P 500, 67 percent correlated to the Morgan Stanley EAFE, and 87 percent correlated to emerging market stocks, according to the New York Times. Correlations are historically high with commodities and high-yield indexes. Of course, correlations among hedge funds are also high. This is not a huge deal really, until the markets head south. That's when hedge funds are supposed to really shine. We'll see.
Our take on this news: As stated previously in earlier blogs here, as well as our previously posted personal blogs. Who didn't see this day coming with all this new money coming into play? We all seen this the fast approaching. Tick... tock... tick... tock... tick... tock...
Our take on this news: As stated previously in earlier blogs here, as well as our previously posted personal blogs. Who didn't see this day coming with all this new money coming into play? We all seen this the fast approaching. Tick... tock... tick... tock... tick... tock...
Thursday, June 7, 2007
Weill backing new investment firm
Is Sandy Weill getting back into the game? Well, that's the scuttlebutt. Turns out that Peter Scaturro, who headed Citigroup's private bank until leaving for U.S. Trust, is leaving his current post at the end of the month. Scaturro has been credited with a turnaround at the firm, which had been hit hard by defections and a lack of synergy with its then-owner Charles Schwab. U.S. Trust was bought by Bank of America recently. Unfortunately, there have been subsequent disagreements leading to his somewhat surprising departure. The New York Post reports Scaturro has held talks with Weill and various private equity firms about launching a wealth management firm. The field is crowded, but it seems he has the name and the supporters to make it happen.
Our take on this news: Good for Sandy Weill. A brilliant investor in his own right now financing a new investment firm. While many corporate raiders and financiers of the past, Asher Edelman, now enjoying art in Paris, Saul Steinberg resting easy and enjoying his grandchildren, the Minneapolis financiers of Irwin Jacobs tending to his boating and fishing tournament empire, Carl Pohlad turning the reins over to his sons and watching his Minnesota Twins play competitive baseball, and Richard Christenson announcing his retirement from the private equity firm he started 30 years ago. It is refreshing to see a Weill come out from retirement and guide this new firm with his long history of success in building value. Hooray and best wishes to Sam Weill.
Our take on this news: Good for Sandy Weill. A brilliant investor in his own right now financing a new investment firm. While many corporate raiders and financiers of the past, Asher Edelman, now enjoying art in Paris, Saul Steinberg resting easy and enjoying his grandchildren, the Minneapolis financiers of Irwin Jacobs tending to his boating and fishing tournament empire, Carl Pohlad turning the reins over to his sons and watching his Minnesota Twins play competitive baseball, and Richard Christenson announcing his retirement from the private equity firm he started 30 years ago. It is refreshing to see a Weill come out from retirement and guide this new firm with his long history of success in building value. Hooray and best wishes to Sam Weill.
Prudential to close equity research group
We've discussed before that the business model for research and trading has changed. Once you took investment banking out of the equation, it seemed like a less viable concern, especially in this era of unbundled trades. So it's not really surprising that Prudential Financial, the big insurer, will shut down its equity research and trading business, laying off about 420 staffers around the world. Prudential said it was unable to achieve the appropriate scale and would rather focus on other businesses. Recall that well-known bank analyst Michael Mayo and his team left for Deutsche Bank recently. It seems that research can no longer sustain a sales and trading operation. There are some independent shops that have found niches, however. It's telling that Prudential could not find a buyer; it had been on the block for months.
Our take on this news: The reason Prudential wasn't able to sell its operations was because that new firms are springing up doing that line of work. Why invest hundreds of millions for an operation one can start from scratch for much less. The top-notch research firms are still around and doing quite well.
Our take on this news: The reason Prudential wasn't able to sell its operations was because that new firms are springing up doing that line of work. Why invest hundreds of millions for an operation one can start from scratch for much less. The top-notch research firms are still around and doing quite well.
Wednesday, June 6, 2007
Putnam settles with SEC
Two former fund managers at Putnam, who were sued by the US market regulator in 2003 over a mutual fund scandal, have settled out of court for a combined $1.5m (€1.1m).
Bloomberg reports Justin Scott agreed to forfeit $1.05m in profits and fines, while former colleague Omid Kamshad agreed to pay $471,000 to settle the claims.
The pair, both managing directors at Putnam in 2003, were sued by the Securities & Exchange Commission and Bill Galvin, secretary of the Commonwealth of Massachusetts, for trading mutual funds illegally.
According to documents filed, they moved money around the various funds in round trades, taking advantage of sophisticated arbitrage opportunities and inside information.
Our take on this news: Why aren't these two individuals in jail? Is doing something illegal criminal anymore? The only way to stop corruption on Wall Street is to jail them for their illegal activities. The fines they can afford, jail time is something they need to have for punishment.
The case led to massive client withdrawals from Putnam, amounting to over $50bn. The company agreed in 2004 to pay $110m to settle related claims that it failed to report the wrongdoing.
Putnam was sold in January to Canadian insurer Power Financial for $3.9bn.
Kamshad and Scott neither admitted nor denied any wrongdoing under the agreement, the newswire said, and as a condition they are barred from working with an investment adviser for one year.
Last July, Kamshad was hired as a researcher by hedge fund group Grosvenor Street Capital. It is unclear what effect the settlement will have on his employment.
Bloomberg reports Justin Scott agreed to forfeit $1.05m in profits and fines, while former colleague Omid Kamshad agreed to pay $471,000 to settle the claims.
The pair, both managing directors at Putnam in 2003, were sued by the Securities & Exchange Commission and Bill Galvin, secretary of the Commonwealth of Massachusetts, for trading mutual funds illegally.
According to documents filed, they moved money around the various funds in round trades, taking advantage of sophisticated arbitrage opportunities and inside information.
Our take on this news: Why aren't these two individuals in jail? Is doing something illegal criminal anymore? The only way to stop corruption on Wall Street is to jail them for their illegal activities. The fines they can afford, jail time is something they need to have for punishment.
The case led to massive client withdrawals from Putnam, amounting to over $50bn. The company agreed in 2004 to pay $110m to settle related claims that it failed to report the wrongdoing.
Putnam was sold in January to Canadian insurer Power Financial for $3.9bn.
Kamshad and Scott neither admitted nor denied any wrongdoing under the agreement, the newswire said, and as a condition they are barred from working with an investment adviser for one year.
Last July, Kamshad was hired as a researcher by hedge fund group Grosvenor Street Capital. It is unclear what effect the settlement will have on his employment.
Hedge Funds shorting ETF's
There's a whole lot of hedge funds out there trying to short stocks. Add to that a growing number of mutual funds and even individuals as well as a rising market, and you've got a really tough environment in which to short. Just borrowing the shares is tough. That's one reason why hedge fund Keel Capital Management shuttered itself. The lack of short opportunities made it hard to stick to its parameters. So what to do? According to MarketWatch, more funds are experimenting with shorting exchange traded funds. Right now, there are no fewer than eight ETFs with short interest that exceeds the number of shares outstanding. My guess is that it will be hard to short ETFs pretty soon.
Our take on this news: This is a sheer sign of the desperation of the hedge fund industry. Their heydays are numbers by both the growing global economy and soon-to-be stricter regulations.
Our take on this news: This is a sheer sign of the desperation of the hedge fund industry. Their heydays are numbers by both the growing global economy and soon-to-be stricter regulations.
The powerhouse of Goldman Sachs
Goldman Sachs has worked on nearly half of all private equity deals around the world so far in 2007, in what is turning out to be a record year for the industry.
The combined value of buyouts in the first five months of this year has climbed to nearly $500bn (€372bn), according to data provider Dealogic, and Goldman has worked as an adviser or finance arranger on 50 deals worth a combined $226.5bn.
Goldman pushed JP Morgan and Citi into second and third place respectively, but was boosted by the firm advising its in-house private equity arm’s $87.7bn of deals. Based on an assumed 1% to 2% advisory and debt arrangement fee, Goldman Sachs could have earned $4bn in the first five months, if all announced deals are completed.
By the end of May, private equity firms had announced $483bn of deals, more than double the total by the same stage of 2006 and nearly 30 times the value a decade before.
A third of the year’s deals were announced last month, Dealogic said, including Goldman Sachs and TPG Capital’s agreed $25bn take-private of US telecoms company Alltel. However, Kohlberg Kravis Roberts has taken the top spot for financial sponsors having agreed $123bn of deals.
KKR’s global buyout total was nearly the same size as the entire value of announced deals in Europe, according to Dealogic, which was $734bn.
Our take on this news: Goldman Sachs is indeed a powerful and formiable investment firm. However, KKR is still and always will be the King of Wall Street. KKR is superior to everyone in every aspect of mergers and acquisitions industry.
The combined value of buyouts in the first five months of this year has climbed to nearly $500bn (€372bn), according to data provider Dealogic, and Goldman has worked as an adviser or finance arranger on 50 deals worth a combined $226.5bn.
Goldman pushed JP Morgan and Citi into second and third place respectively, but was boosted by the firm advising its in-house private equity arm’s $87.7bn of deals. Based on an assumed 1% to 2% advisory and debt arrangement fee, Goldman Sachs could have earned $4bn in the first five months, if all announced deals are completed.
By the end of May, private equity firms had announced $483bn of deals, more than double the total by the same stage of 2006 and nearly 30 times the value a decade before.
A third of the year’s deals were announced last month, Dealogic said, including Goldman Sachs and TPG Capital’s agreed $25bn take-private of US telecoms company Alltel. However, Kohlberg Kravis Roberts has taken the top spot for financial sponsors having agreed $123bn of deals.
KKR’s global buyout total was nearly the same size as the entire value of announced deals in Europe, according to Dealogic, which was $734bn.
Our take on this news: Goldman Sachs is indeed a powerful and formiable investment firm. However, KKR is still and always will be the King of Wall Street. KKR is superior to everyone in every aspect of mergers and acquisitions industry.
Monday, June 4, 2007
Where Venture Capital is flocking to now
What's the hottest place to invest? That's always what any self-respecting venture capitalist wants to know. In 2004, Russian tech startups were clearly off the radar screen, as Sven Lingjaerde will tell you. Lingjaerde, a VC and founder of the European Tech Tour Assn., organized a visit to Moscow for 53 venture capitalists from the U.S. and Western Europe. At the time, none of the 25 outfits that pitched to the group got funding.
Fast-forward three years, and it's a different story. Today, eight of those companies have secured Western backing. And by some estimates, three could be valued north of $1 billion.
Finally, investors are starting to look beyond China and India and are pouring more time, energy, and money into the fast-growing economies of Central and Eastern Europe. At least $500 million is sitting in funds targeting the region, and far more is coming from global outfits that see potential in the former Soviet bloc. With a deep pool of creative technology talent and a gross domestic product expanding at a rate of 6% to 9% per year, Eastern Europe is piquing the interest of VCs large and small. Says Yoav Sarnet, who oversees business development in the region for Cisco System (CSCO)s Inc.: "As we look globally to where the next venture asset class is going to emerge, it's definitely Russia and Central and Eastern Europe."
Some VCs even say the region could soon rival India and China when it comes to spawning tech startups with global potential. While India has built a global hub for information technology outsourcing, little of the business is core research and development for cutting-edge products. Russians, Poles, and Romanians, by contrast, excel at the kind of creative development work tech startups need for breakthrough innovations, many investors say. "Central and Eastern Europe are already a better play" than China and India, says Scott Maxwell, co-founder of OpenView, which has invested 30% of a $100 million global technology fund in the region. "The technologies are more sophisticated."
Venture investors say the region is a bargain, with the potential for finding blockbuster hits by exporting these startups' wares and knowhow to customers worldwide. Some think valuations of tech companies are as little as 10% of comparable outfits in the U.S. "You can make very small investments with mega-returns if the technology works out," says Richard Stokvis, a partner at London investment bank Europa Ventures and a medical technology expert who advises venture backers in the region.
PROS AND CONSFor the moment, Russia is getting lots of buzz, thanks in no small part to its huge and increasingly flush consumer class. Investors like the country's vibrant domestic market for Web and mobile phone services. And the potential profits in serving Russia's 150 million consumers is clear, thanks to successes such as Yandex and Ozon, Russia's answers to Google (GOOG) and Amazon.com (AMZN).
That has investors jumping in with both feet. Asset Management Co. in Palo Alto, Calif., run by legendary VC Franklin "Pitch" Johnson, has launched a $104 million fund called Bioprocess Capital Partners. It will invest in Russian biotech and includes $52 million from the Kremlin. Veteran tech executive Roel Pieper, based in the Netherlands, has set up a new fund primarily targeting Russian companies, including hydrogen technologies and light jets. And Alexander Galitsky, a Russian entrepreneur turned investor, is planning a fund later this year in partnership with unnamed Western VCs. "This is just the beginning," says Joe Bowman, an American working for Russian Technologies, a $50 million early-stage fund based in Moscow. "We're entering a new era for Russian venture capital."
Diving into Russia, though, still carries plenty of risk, and for some the country remains strictly off-limits.
With its rampant corruption, shifting legal environment, and competition from deep-pocketed locals, Russia can be a tough place for Western VCs. "One reason not to go to Russia is the amount of Russian money available," says Pekka Santeri Mäki, managing director of 3TS Capital Partners Ltd., which shuns Russia for Central Europe and is closing deals with two tech startups in Romania.
Indeed, Central Europe has no shortage of brilliant minds and promising technologies waiting to be set loose. New York VC Martin Jasinski visited 50 companies in Poland last year and was impressed with startup Medicalgorithmics, which recently received European approval to market a portable electrocardiogram monitor that sends data wirelessly to a patient's doctor. Medicalgorithmics is the first investment of New Europe Ventures, a $50 million fund aimed at Eastern Europe.
While there's plenty of tech talent in the region, its companies are often less endowed with management chops. So some investors are providing financial and marketing smarts. U.S. and European backers of LogMeIn, a maker of popular software for remote access to PCs, urged the company to move its marketing headquarters to Boston, which helped put sales on track to double this year, to $40 million. And Acronis, a Russian software house that makes disaster recovery programs, left its research-and-development team of 150 outside Moscow but moved its headquarters to Burlington, Mass., and hired an American CEO to pump up global sales.
One pleasant surprise for VCs is the red-hot Warsaw Stock Exchange. Last year, 38 companies raised a total of $1.9 billion in initial public offerings in Warsaw—second in Europe behind the London Stock Exchange. That helped fuel a 42% rise in Warsaw's benchmark index in 2006. Since January, 19 more companies have gone public in the Polish capital, helping to push the exchange up by an additional 18% so far this year. In October the bourse will launch a secondary market tailored to listings for technology startups as it seeks to extend its allure as a regional exchange.
The winners on the Warsaw bourse could soon be joined by a handful of Russian startups that are eyeing public offerings. One is Yandex, a 10-year-old Web search company based in Moscow that has a 50% market share in Russia, vs. Google's 15%. Yandex' revenues doubled last year, to $72 million, and a planned IPO could give the company a market capitalization of some $1 billion.
Our take on this news: The sauviest venture capitalists have always looked throughtout the world for opportunities. With an ever-changing economical climate in many countries, opportunites abound everywhere. Just make sure your invesatments aren't in politically troubled countries.
Fast-forward three years, and it's a different story. Today, eight of those companies have secured Western backing. And by some estimates, three could be valued north of $1 billion.
Finally, investors are starting to look beyond China and India and are pouring more time, energy, and money into the fast-growing economies of Central and Eastern Europe. At least $500 million is sitting in funds targeting the region, and far more is coming from global outfits that see potential in the former Soviet bloc. With a deep pool of creative technology talent and a gross domestic product expanding at a rate of 6% to 9% per year, Eastern Europe is piquing the interest of VCs large and small. Says Yoav Sarnet, who oversees business development in the region for Cisco System (CSCO)s Inc.: "As we look globally to where the next venture asset class is going to emerge, it's definitely Russia and Central and Eastern Europe."
Some VCs even say the region could soon rival India and China when it comes to spawning tech startups with global potential. While India has built a global hub for information technology outsourcing, little of the business is core research and development for cutting-edge products. Russians, Poles, and Romanians, by contrast, excel at the kind of creative development work tech startups need for breakthrough innovations, many investors say. "Central and Eastern Europe are already a better play" than China and India, says Scott Maxwell, co-founder of OpenView, which has invested 30% of a $100 million global technology fund in the region. "The technologies are more sophisticated."
Venture investors say the region is a bargain, with the potential for finding blockbuster hits by exporting these startups' wares and knowhow to customers worldwide. Some think valuations of tech companies are as little as 10% of comparable outfits in the U.S. "You can make very small investments with mega-returns if the technology works out," says Richard Stokvis, a partner at London investment bank Europa Ventures and a medical technology expert who advises venture backers in the region.
PROS AND CONSFor the moment, Russia is getting lots of buzz, thanks in no small part to its huge and increasingly flush consumer class. Investors like the country's vibrant domestic market for Web and mobile phone services. And the potential profits in serving Russia's 150 million consumers is clear, thanks to successes such as Yandex and Ozon, Russia's answers to Google (GOOG) and Amazon.com (AMZN).
That has investors jumping in with both feet. Asset Management Co. in Palo Alto, Calif., run by legendary VC Franklin "Pitch" Johnson, has launched a $104 million fund called Bioprocess Capital Partners. It will invest in Russian biotech and includes $52 million from the Kremlin. Veteran tech executive Roel Pieper, based in the Netherlands, has set up a new fund primarily targeting Russian companies, including hydrogen technologies and light jets. And Alexander Galitsky, a Russian entrepreneur turned investor, is planning a fund later this year in partnership with unnamed Western VCs. "This is just the beginning," says Joe Bowman, an American working for Russian Technologies, a $50 million early-stage fund based in Moscow. "We're entering a new era for Russian venture capital."
Diving into Russia, though, still carries plenty of risk, and for some the country remains strictly off-limits.
With its rampant corruption, shifting legal environment, and competition from deep-pocketed locals, Russia can be a tough place for Western VCs. "One reason not to go to Russia is the amount of Russian money available," says Pekka Santeri Mäki, managing director of 3TS Capital Partners Ltd., which shuns Russia for Central Europe and is closing deals with two tech startups in Romania.
Indeed, Central Europe has no shortage of brilliant minds and promising technologies waiting to be set loose. New York VC Martin Jasinski visited 50 companies in Poland last year and was impressed with startup Medicalgorithmics, which recently received European approval to market a portable electrocardiogram monitor that sends data wirelessly to a patient's doctor. Medicalgorithmics is the first investment of New Europe Ventures, a $50 million fund aimed at Eastern Europe.
While there's plenty of tech talent in the region, its companies are often less endowed with management chops. So some investors are providing financial and marketing smarts. U.S. and European backers of LogMeIn, a maker of popular software for remote access to PCs, urged the company to move its marketing headquarters to Boston, which helped put sales on track to double this year, to $40 million. And Acronis, a Russian software house that makes disaster recovery programs, left its research-and-development team of 150 outside Moscow but moved its headquarters to Burlington, Mass., and hired an American CEO to pump up global sales.
One pleasant surprise for VCs is the red-hot Warsaw Stock Exchange. Last year, 38 companies raised a total of $1.9 billion in initial public offerings in Warsaw—second in Europe behind the London Stock Exchange. That helped fuel a 42% rise in Warsaw's benchmark index in 2006. Since January, 19 more companies have gone public in the Polish capital, helping to push the exchange up by an additional 18% so far this year. In October the bourse will launch a secondary market tailored to listings for technology startups as it seeks to extend its allure as a regional exchange.
The winners on the Warsaw bourse could soon be joined by a handful of Russian startups that are eyeing public offerings. One is Yandex, a 10-year-old Web search company based in Moscow that has a 50% market share in Russia, vs. Google's 15%. Yandex' revenues doubled last year, to $72 million, and a planned IPO could give the company a market capitalization of some $1 billion.
Our take on this news: The sauviest venture capitalists have always looked throughtout the world for opportunities. With an ever-changing economical climate in many countries, opportunites abound everywhere. Just make sure your invesatments aren't in politically troubled countries.
Morgan Stanley spinning off Discover
NEW YORK (AP) -- Morgan Stanley on Friday said it will spin off its Discover Financial Services unit on June 30 to focus on its more lucrative securities business.
The New York-based company had said in December that it would spin off the credit-card unit, without disclosing details. On Friday, it said shareholders will get one share of Discover common stock for every two shares of Morgan Stanley. It expects regular trading to begin July 2 on the New York Stock Exchange under the stock symbol "DFS."
This marks the end of Morgan Stanley's involvement with Discover, which began as a unit of Sears Roebuck & Co. in 1986 and eventually grew into the world's fourth-biggest credit-card brand. Discover has about $5.2 billion in equity, with some $46.3 billion of outstanding loans.
While Discover has been an important slice of Morgan Stanley's revenue stream, there has been continued calls by Wall Street for the company to focus on its more lucrative investment banking and institutional trading business. The nation's second-largest investment house has in the past trailed the kind of profit margins regularly achieved by bigger rival Goldman Sachs Group Inc.
The spin-off is structured as a tax-free dividend. Morgan Stanley is not keeping any shares.
The move comes as rival Visa International plans to go public in 2007, following in the footsteps of Mastercard Inc.'s banner listing earlier this year.
Discover touts more than 50 million card holders, but only 18.4 million active accounts. The unit earned $1.5 billion in 2006 on record revenue of $4.3 billion.
Shares of Morgan Stanley rose $1.03, or 1.2 percent, to $86.07 Friday
Our take on this news: It is about time Morgan Stanley figured this one out! The Discover spin-ff will be a win-win for both companies.
The New York-based company had said in December that it would spin off the credit-card unit, without disclosing details. On Friday, it said shareholders will get one share of Discover common stock for every two shares of Morgan Stanley. It expects regular trading to begin July 2 on the New York Stock Exchange under the stock symbol "DFS."
This marks the end of Morgan Stanley's involvement with Discover, which began as a unit of Sears Roebuck & Co. in 1986 and eventually grew into the world's fourth-biggest credit-card brand. Discover has about $5.2 billion in equity, with some $46.3 billion of outstanding loans.
While Discover has been an important slice of Morgan Stanley's revenue stream, there has been continued calls by Wall Street for the company to focus on its more lucrative investment banking and institutional trading business. The nation's second-largest investment house has in the past trailed the kind of profit margins regularly achieved by bigger rival Goldman Sachs Group Inc.
The spin-off is structured as a tax-free dividend. Morgan Stanley is not keeping any shares.
The move comes as rival Visa International plans to go public in 2007, following in the footsteps of Mastercard Inc.'s banner listing earlier this year.
Discover touts more than 50 million card holders, but only 18.4 million active accounts. The unit earned $1.5 billion in 2006 on record revenue of $4.3 billion.
Shares of Morgan Stanley rose $1.03, or 1.2 percent, to $86.07 Friday
Our take on this news: It is about time Morgan Stanley figured this one out! The Discover spin-ff will be a win-win for both companies.
Bancroft's changing their mind?
No one really thought the Bancrofts were united in their decision to spurn Rupert Murdoch. Indeed, the offer, generous on the surface, came at a time of generational transition within the family. While the elders opposed a deal, their children were more willing to think about it. Some, according to the New York Times, thought that the company needed some strong medicine to cure years of poor performance. Still, it took family member Leslie Hill to push the family to take action. The result is that the family changed its tune and is now willing to speak with News Corporation. I'm not sure what this will amount too. Many are betting on another bidder emerging. Stay tuned.
Our take on this news: Did anyone really doubt that the offer by Murdoch would be spurned? Not any of us!
Our take on this news: Did anyone really doubt that the offer by Murdoch would be spurned? Not any of us!
Friday, June 1, 2007
Sizing up Solar IPO's
Two profitable Chinese outfits are going public, but sunstruck investors should remember last year's disappointing ethanol offerings
by Alex Halperin
Around this time last year, corn-based ethanol sprouted into investor's minds. Stock in agriculture giant Archer Daniels Midland (ADM) was soaring on ethanol prices, and smaller pure-play outfits like VeraSun Energy (VSE) and Aventine Renewable Energy (AVR) timed their initial public offerings to coincide with America's newfound interest in alternative fuel.
It hasn't worked out as planned. In Washington, representatives of corn-growing states have put massive support behind the fuel, ensuring that its use will increase for years to come, but the ethanol industry hasn't been able to avoid criticism that the fuel is more of a sop to farmers than the solution to U.S. energy problems. Even ethanol producers have suffered, as demand for the fuel has sent corn prices skyrocketing. Since their market debuts, VeraSun and Aventine shares have both fallen more than 40%, and ADM is well off its 52-week high.
That hasn't kept other alt-energy players from throwing their hats in the ring. This year, investors willing to brave this still risky segment may have a more attractive option in solar power. Two upcoming U.S. initial public offerings by Chinese companies highlight a clean energy source that could be a smarter long-term bet. While corn-derived ethanol's strongest advocates are corn farmers and their lobbyists, energy analysts tend to see a bright future for solar power once it can overcome several obstacles.
Seeking Secure Supplies
The first hurdle, not surprisingly, is cost. Solar installations are expensive and polysilicon, a necessary ingredient for solar panels and computer chips, is in short supply. Demand exceeds the capacity and new plants can take years to come on line. Polysilicon is so highly valued that U.S. outfit Evergreen Solar (ESLR) and the Chinese company Suntech Power (STP) recently exchanged stakes in themselves for secure supplies of the material.
This week should see the IPO of LDK Solar, a Chinese manufacturer of solar wafers used in the solar panels that actually convert sunlight into electricity. The company, analysts say, is in a relatively good position, having secured much of the polysilicon it will need for its expected production capacity. Sam Snyder, an analyst at IPO research shop Renaissance Capital, says the deal for the pure-play wafer manufacturer has "scarcity value" in an industry where companies split up the multistep process of manufacturing solar panels.
Another Chinese player expected to price in coming weeks is Yingli Green Energy, which offers investors a vertically integrated model that manufactures wafers and makes them into photovoltaic cells. It also works on folding them into workable solar power-generating systems.
Relatively Young Industry
Both companies have put up credible numbers. LDK posted 2006 net income of $25.8 million on sales of $105.5 million, while Yingli had $24.1 million in net income on revenue of $114.4 million in the first eight months of 2006.
So far the relatively young industry has seen excitement as stocks in profitable companies like SunPower (SPWR) and First Solar (FSLR) enjoyed enormous gains in their stock prices while other less nimble companies struggled in the fledgling space. The Chinese companies may have advantages over their U.S. counterparts as demand for solar electricity builds.
Todd Glass, chair of the energy practice group at law firm Heller Ehrman, says "anytime where manufacturing cost is a key component, China has a competitive edge" over American outfits. This is especially the case when the companies have a relatively solid supply of polysilicon, as both LDK and Yingli do.
New Technology on the Way
However industry dynamics could be changing. Glass sees the polysilicon supply growing as more plants get up and running. Already industry consensus has it that more polysilicon is used in solar panels than for microchips, their previous dominant use.
Polysilicon has proven a boost for manufacturers such as St. Peters (Mo.)-based MEMC Electronic Materials (WFR) which has seen its stock price more than double since July. However a newer technology called thin film could emerge as the next-generation solar competitor. Miasolé, a private Silicon Valley startup, manufactures solar cells that use a metallic compound instead of polysilicon, exempting it from the heated competition for polysilicon. Profitable First Solar also uses a non-silicon technology.
But before warming to solar power, investors should remember how last year's ethanol boomlet went sour. Even when a product gains widespread use, profits—and stock-price gains—are not a sure thing. And while solar technology has a bright future, not all the players will share the spoils.
Our take on this news: This is a great idea to give alternative energy firms access to the marketplace. This industry's need alot of capital which Wall Street can provide. This, too, is an old concept never taken advantage of a decade ago. Better later, than never.
by Alex Halperin
Around this time last year, corn-based ethanol sprouted into investor's minds. Stock in agriculture giant Archer Daniels Midland (ADM) was soaring on ethanol prices, and smaller pure-play outfits like VeraSun Energy (VSE) and Aventine Renewable Energy (AVR) timed their initial public offerings to coincide with America's newfound interest in alternative fuel.
It hasn't worked out as planned. In Washington, representatives of corn-growing states have put massive support behind the fuel, ensuring that its use will increase for years to come, but the ethanol industry hasn't been able to avoid criticism that the fuel is more of a sop to farmers than the solution to U.S. energy problems. Even ethanol producers have suffered, as demand for the fuel has sent corn prices skyrocketing. Since their market debuts, VeraSun and Aventine shares have both fallen more than 40%, and ADM is well off its 52-week high.
That hasn't kept other alt-energy players from throwing their hats in the ring. This year, investors willing to brave this still risky segment may have a more attractive option in solar power. Two upcoming U.S. initial public offerings by Chinese companies highlight a clean energy source that could be a smarter long-term bet. While corn-derived ethanol's strongest advocates are corn farmers and their lobbyists, energy analysts tend to see a bright future for solar power once it can overcome several obstacles.
Seeking Secure Supplies
The first hurdle, not surprisingly, is cost. Solar installations are expensive and polysilicon, a necessary ingredient for solar panels and computer chips, is in short supply. Demand exceeds the capacity and new plants can take years to come on line. Polysilicon is so highly valued that U.S. outfit Evergreen Solar (ESLR) and the Chinese company Suntech Power (STP) recently exchanged stakes in themselves for secure supplies of the material.
This week should see the IPO of LDK Solar, a Chinese manufacturer of solar wafers used in the solar panels that actually convert sunlight into electricity. The company, analysts say, is in a relatively good position, having secured much of the polysilicon it will need for its expected production capacity. Sam Snyder, an analyst at IPO research shop Renaissance Capital, says the deal for the pure-play wafer manufacturer has "scarcity value" in an industry where companies split up the multistep process of manufacturing solar panels.
Another Chinese player expected to price in coming weeks is Yingli Green Energy, which offers investors a vertically integrated model that manufactures wafers and makes them into photovoltaic cells. It also works on folding them into workable solar power-generating systems.
Relatively Young Industry
Both companies have put up credible numbers. LDK posted 2006 net income of $25.8 million on sales of $105.5 million, while Yingli had $24.1 million in net income on revenue of $114.4 million in the first eight months of 2006.
So far the relatively young industry has seen excitement as stocks in profitable companies like SunPower (SPWR) and First Solar (FSLR) enjoyed enormous gains in their stock prices while other less nimble companies struggled in the fledgling space. The Chinese companies may have advantages over their U.S. counterparts as demand for solar electricity builds.
Todd Glass, chair of the energy practice group at law firm Heller Ehrman, says "anytime where manufacturing cost is a key component, China has a competitive edge" over American outfits. This is especially the case when the companies have a relatively solid supply of polysilicon, as both LDK and Yingli do.
New Technology on the Way
However industry dynamics could be changing. Glass sees the polysilicon supply growing as more plants get up and running. Already industry consensus has it that more polysilicon is used in solar panels than for microchips, their previous dominant use.
Polysilicon has proven a boost for manufacturers such as St. Peters (Mo.)-based MEMC Electronic Materials (WFR) which has seen its stock price more than double since July. However a newer technology called thin film could emerge as the next-generation solar competitor. Miasolé, a private Silicon Valley startup, manufactures solar cells that use a metallic compound instead of polysilicon, exempting it from the heated competition for polysilicon. Profitable First Solar also uses a non-silicon technology.
But before warming to solar power, investors should remember how last year's ethanol boomlet went sour. Even when a product gains widespread use, profits—and stock-price gains—are not a sure thing. And while solar technology has a bright future, not all the players will share the spoils.
Our take on this news: This is a great idea to give alternative energy firms access to the marketplace. This industry's need alot of capital which Wall Street can provide. This, too, is an old concept never taken advantage of a decade ago. Better later, than never.
Evercore aims to make bigger splash
Boutique investment bank Evercore Partners really wants to make a splash in the deal world. Evercore's co-chairman and co-CEO Roger Altman says the bank aims to hire about 10 more senior bankers this year, bankers of the big-name variety. That's a lot for a firm that has just 16 such "producing partners" on its roster currently. The latest hire was a big one: Mark Vander Ploeg, a veteran of Merrill Lynch, where he was vice chairman and co-head of consumer, retail, gaming, leisure and transportation. There are rumors that Evercore is pursuing George Young, a star telecom banker who left Lehman Brothers earlier this year. I'm sure the firm is handing out lots of equity. The bank is also betting there's a lot of legs left in the current deal rally. We'll likely see more big announcements.
Our take on this news: Evercore is one of the few companies that have the right idea. Find proven "producing partners" who have the ability to distinguish itself from trying to be something there not. Giving out equity of the firm is the right incentive to qualified and competent personal.
Our take on this news: Evercore is one of the few companies that have the right idea. Find proven "producing partners" who have the ability to distinguish itself from trying to be something there not. Giving out equity of the firm is the right incentive to qualified and competent personal.
Value hedge fund, and interesting concept
We do not often associate value investing with hedge funds. We tend to think of hedge funds as swashbuckling growth style investing goosed with lots of derivative play. But Sellers Capital, formed by a former Morningstar strategist, is indeed a value-oriented hedge fund. What's more, it's concentrated. No more than 15 stocks in its portfolio at a time. Returns are returns after all, so if the fund can make it work, people will notice. Before fees, the fund has generated annualized returns of 33.1 percent vs. 13.4 percent for the S&P 500. After fees, investors have still probably beat the index. Still, I doubt we'll see a lot of similar funds rise. Factoring out all the fees, it just may be that people will be tempted over the long-term to ask: Why not a mutual fund?
Our take on this news: Great question, "Why not a mutual fund?" Stay clear of the Hedge Fund industry, whenever everyone joins in the process, it is set up for a downside and failure.
Our take on this news: Great question, "Why not a mutual fund?" Stay clear of the Hedge Fund industry, whenever everyone joins in the process, it is set up for a downside and failure.
Thursday, May 31, 2007
Goldman Sachs hedge fund greatly under-performing
Financial News Online reports that Goldman Sachs' top hedge fund has continued to lose ground even after it has hired a team of 17 traders from Amaranth. The well-known Global Alpha hedge fund dropped 3.4 percent in January through April, though it rebounded a bit in April. On average, hedge funds gained in the period. What gives? Global Alpha reportedly made some big losing bets that some, like the Canadian dollar and Norwegian krone, would fall. It was also hit by market-neutral bond and equity plays. Is this going to prove to be a lingering problem for the fund? Hard to say. It lost nearly 10 percent last year. The year before it gained almost 40 percent. Goldman Sachs according to Alpha was overtaken by JPMorgan as the largest hedge fund operator this year.
Our take on this news: As all of us reported in our own personal blogs over the months on Goldmans Sachs poor performance in the hedge fund industry. We see more poor performances with other hedge funds in the months and years ahead. We believe their are cracks all over the hedge fund industry and believe there will be a shake up and/or a collapse of the industry.
Our take on this news: As all of us reported in our own personal blogs over the months on Goldmans Sachs poor performance in the hedge fund industry. We see more poor performances with other hedge funds in the months and years ahead. We believe their are cracks all over the hedge fund industry and believe there will be a shake up and/or a collapse of the industry.
Tuesday, May 29, 2007
More financial firms going public
We've been talking a lot of about more hedge funds going public in the wake of Fortress Investments' offering. It appears to be a reality. We're likely to see more hedge funds go public before more private equity funds make the move. According to an AP update, Souren Ouzounian, banker at Merrill Lynch, said at a conference that six of his hedge-fund clients are mulling IPOs. A Lehman Brothers banker said four clients are going to file in "the fairly near term." But you have to wonder if the thought processes have been complicated a bit by the lure of the private placements market, which is more active than the IPO market these days. Oaktree Capital Management last week placed securities privately in its management company.
Our take on the news: Once again, an idea brought to the public marketplace's attention a decade ago by smart money people, only now deciding to go public. What will happen to these funds when the bottom falls out of the market and the hedge fund industry goes in the tank? Everyone will lose their shirts because greed always comes first on Wall Street. Had a decade ago the equity and hedge funds entered the marketplace, the system would of worked better, now everyone is a genious on Wall Street and the idea of going public will collapse like all other great ideas.
Our take on the news: Once again, an idea brought to the public marketplace's attention a decade ago by smart money people, only now deciding to go public. What will happen to these funds when the bottom falls out of the market and the hedge fund industry goes in the tank? Everyone will lose their shirts because greed always comes first on Wall Street. Had a decade ago the equity and hedge funds entered the marketplace, the system would of worked better, now everyone is a genious on Wall Street and the idea of going public will collapse like all other great ideas.
LBO candidate search firms
Private equity funds and hedge funds are not always at odds. Bush Helzberg and Jonathan Angrist, who started their Private Value Arbitrage Fund in 2003, seek out shares of small- and medium-sized companies that they sense are likely to be bought out. According to MarketWatch, they analyze companies the same way private equity shops do and buy if the stock is trading at a perceived discount. Then they are likely to call the company's top executives and try to interest them in a going-private transaction. If the answer is yes, they play "matchmaker." Helzberg and Angrist call private equity firms that they have gotten to know and suggest a meeting. Sometimes, if a deal works out, they end up with a finder's fee. They say more companies are receptive to the idea.
Our take on this news: This is actually a process that numerous firms have done for many years now. Those firms just kept a low-profile and stayed out of the news, now the "cat is out-of-the-bag" and we're sure this industry will be abused and wrecked just like every other good thing about Wall Street. Too many so-called experts doing poor work. Sad to see in many respects, just hope that the great firms that we're acquainted with doing "search" work don't fall by the wayside because of pure greed by acquiring firms.
Our take on this news: This is actually a process that numerous firms have done for many years now. Those firms just kept a low-profile and stayed out of the news, now the "cat is out-of-the-bag" and we're sure this industry will be abused and wrecked just like every other good thing about Wall Street. Too many so-called experts doing poor work. Sad to see in many respects, just hope that the great firms that we're acquainted with doing "search" work don't fall by the wayside because of pure greed by acquiring firms.
Thursday, May 24, 2007
Ridiculous Hedge Fund fees with poor performance
We've discussed at length the fee structure of hedge funds, which is increasingly leading to massive payouts for big-fund managers even in so-so years. The New York Times notes that the flagship hedge fund at Goldman Sachs lost 6 percent last year, but it still brought in a lot of fee income. Bridgewater Associates has returned less than 4 percent the last two years; its founder made $350 million in 2006. Many are predicting that the awkward circumstance of good pay against poor performance will continue. There's just so much money flowing into funds still. The larger issue is whether hedge funds are still worth it. The answer according to the big institutions seems to be yes.
Our take on this news: How any investor tolerates these high fees is beyond any of our comprehension. This industry is ready to collapse on its face with total disregard to its investors. Greed always ruins any moneymaking situation.
Our take on this news: How any investor tolerates these high fees is beyond any of our comprehension. This industry is ready to collapse on its face with total disregard to its investors. Greed always ruins any moneymaking situation.
TIBB takeover - Follow Up
FOLLOW UP: In recent weeks, there has been speculation of a possible takeover/buyout of TIBB. There has been no response from our calls and correspondence with the possible suitor Richard Christenson and associates, financiers from Minneapolis, their media spokesperson said that "Mr. Christenson is out-of-town and unavailable for comment."
Our take on this news: Our sources still hold to their original belief that Christenson is accumulating a position in TIBB through a multitude of companies and entities he owns or controls and has been for a period of time. Without question, a great buy at these share prices.
Our take on this news: Our sources still hold to their original belief that Christenson is accumulating a position in TIBB through a multitude of companies and entities he owns or controls and has been for a period of time. Without question, a great buy at these share prices.
Hedge Funds stereotyped
The hedge fund industry has been stereotyped as swashbucklers and risk takers a bit by the media, which has really glorified how much money executives make. But Business Week Online notes some critics say the industry has become far too staid. If mutual funds can be criticized for aping indexes, hedge funds can be hit for becoming too much stock funds. People have noted the rising correlation among hedge fund returns--and the lower returns. Last year, hedge funds returned 13 percent on average, while the S&P 500 returned 13.5 percent. Big customers are not happy about this. They invested for big gains, which is not what they are getting. They could get the same return in index funds. The hedge funds will be quick to note that private equity funds are similarly muted.
Our take on this news: With all the money flowing into these funds, the end is near on decent returns. Too much flowing into deals that won't work out in the years ahead. Whenever there is too much money out there, bad deals will happen. They glory years are over in our opinion.
Our take on this news: With all the money flowing into these funds, the end is near on decent returns. Too much flowing into deals that won't work out in the years ahead. Whenever there is too much money out there, bad deals will happen. They glory years are over in our opinion.
More women have status on Wall Street
For women, it's a tale of two Streets. Increasingly, they are making strides in areas once off limits. Female managing directors are now almost common. They have certainly made gains in research and management in areas like equity capital markets. All this counts as progress. We can only hope that the groundswell will lead to more women in high executive positions. At the moment, I can't think of one who is a candidate to soon head one of the top firms. Zoe Cruz may be an exception. Also, we aren't seeing a lot of women stake claims to high executive positions at hedge funds and private equity funds, where the real action is these days. Still, most firms are taking pains to create female-friendly workplaces. And that, as well, counts as progress.
Our take on this news: This is good news for everyone, because women tend to be more even-keeled and have a better balance on things. Most importantly, they might bring more integrity to Wall Street which has run amuck with corrupt self-serving souls.
Our take on this news: This is good news for everyone, because women tend to be more even-keeled and have a better balance on things. Most importantly, they might bring more integrity to Wall Street which has run amuck with corrupt self-serving souls.
Tuesday, May 22, 2007
KKR out on a clothing spending spree
Shares of footwear companies Skechers USA Inc. and Genesco Inc. rose yesterday, following a published report that they are being targeted by a buyout firm to take them private in two separate deals.
The plan is to combine the companies, after the deals are completed.
The buyout firm is possibly Kohlberg Kravis Roberts & Co., according to industry trade paper Women's Wear Daily, which cited anonymous sources. The acquisition price could not be determined.
Officials at Skechers did not immediately return phone calls. Both David Lilly, a spokesman for KKR, and Claire McCall, a spokeswoman at Genesco, declined to comment.
Shares of Skechers rose more than 9 percent, or $2.97, to $34.11, while shares of Genesco rose more than 3 percent, or $1.60, to $51.47.
Genesco, an accessories and footwear company, has retail brands such as Journeys and Hat World in its repertoire as well as Dockers Footwear.
Skechers markets a variety of men's, women's and children's casual footwear.
On April 23, Genesco formally rejected Foot Locker Inc.'s $1.2 billion takeover offer for all outstanding shares of the company.
But Foot Locker at the time said it isn't ruling out the possibility of raising its bid for its footwear and accessories rival.
Reprinted from New York Post
Our take on this news: KKR is undoubtably the best private equity firm in the business. With 30 years of sucessfully buying out companies and more often than not, making its investors a great deal of money. Sounds like another KKR winner.
The plan is to combine the companies, after the deals are completed.
The buyout firm is possibly Kohlberg Kravis Roberts & Co., according to industry trade paper Women's Wear Daily, which cited anonymous sources. The acquisition price could not be determined.
Officials at Skechers did not immediately return phone calls. Both David Lilly, a spokesman for KKR, and Claire McCall, a spokeswoman at Genesco, declined to comment.
Shares of Skechers rose more than 9 percent, or $2.97, to $34.11, while shares of Genesco rose more than 3 percent, or $1.60, to $51.47.
Genesco, an accessories and footwear company, has retail brands such as Journeys and Hat World in its repertoire as well as Dockers Footwear.
Skechers markets a variety of men's, women's and children's casual footwear.
On April 23, Genesco formally rejected Foot Locker Inc.'s $1.2 billion takeover offer for all outstanding shares of the company.
But Foot Locker at the time said it isn't ruling out the possibility of raising its bid for its footwear and accessories rival.
Reprinted from New York Post
Our take on this news: KKR is undoubtably the best private equity firm in the business. With 30 years of sucessfully buying out companies and more often than not, making its investors a great deal of money. Sounds like another KKR winner.
Possible buyout of Trump Entertainment Resorts
Donald Trump outdid his usual $1 million-per-speech payday and picked up a tidy $25.6 million in just a few hours yesterday without even saying a word publicly.
Shares of the Trump casino group soared nearly 21 percent in an early buying frenzy on prospects that a private equity firm is preparing to acquire it.
Trump's own personal stock swelled in value, at least on paper, to $148.2 million in the busy trading - nearly 11 times the usual daily volume and the biggest embrace of the shares in years.
The company, Trump Entertainment Resorts, two days ago said its board is considering offers to buy the company. Shares shot up $2.73 to $15.80 and its bonds hit a record, with an 8.5 percent note due in 2015 climbing 3.3 cents to 102.4 cents on the dollar.
Three months ago Trump hired Merrill Lynch to determine options for its future, including finding a buyer for all three Trump casinos in Atlantic City, as a whole or individually, or finding partners to help in a costly makeover of the resort hotels.
Trump Entertainment, of which Trump is chairman and president, said yesterday it formed a committee to consider the offers it received. Analysts believe private equity buyers are more likely to make a play for the casinos than other gaming companies.
Trump casinos have struggled for profits since the group emerged from a bankruptcy makeover two years ago, which helped reduce interest rates on its nearly $1.4 billion in debt.
It its latest quarter, the company narrowed its losses to $8.13 million from $9.72 million a year earlier, while revenue dropped 1.4 percent to $234.3 million. Last year it posted revenue of $1.03 billion, up from the prior year.
Atlantic City's casinos are being clobbered by competition from Pennsylvania, Connecticut and upstate New York, and by local no-smoking laws that have cut into attendance, say industry sources.
Last month was one of the worst Aprils on record for Atlantic City's dozen casinos, down an average 10 percent, with Trump Marina off 13.2 percent, the Trump Plaza down 12.6 percent and the Trump Taj Mahal down 19.6 percent, said the New Jersey Casino Control Commission.
Reprinted from New York Post
Our take on the news: Great news for everyone. Trump gets himself out from underneath a real difficult industry. Shareholders benefit from the increased share price of a possible buyout. The acquiring equity firm will give its full attention to bringing this investment to its full potential. Win... win... situation.
Shares of the Trump casino group soared nearly 21 percent in an early buying frenzy on prospects that a private equity firm is preparing to acquire it.
Trump's own personal stock swelled in value, at least on paper, to $148.2 million in the busy trading - nearly 11 times the usual daily volume and the biggest embrace of the shares in years.
The company, Trump Entertainment Resorts, two days ago said its board is considering offers to buy the company. Shares shot up $2.73 to $15.80 and its bonds hit a record, with an 8.5 percent note due in 2015 climbing 3.3 cents to 102.4 cents on the dollar.
Three months ago Trump hired Merrill Lynch to determine options for its future, including finding a buyer for all three Trump casinos in Atlantic City, as a whole or individually, or finding partners to help in a costly makeover of the resort hotels.
Trump Entertainment, of which Trump is chairman and president, said yesterday it formed a committee to consider the offers it received. Analysts believe private equity buyers are more likely to make a play for the casinos than other gaming companies.
Trump casinos have struggled for profits since the group emerged from a bankruptcy makeover two years ago, which helped reduce interest rates on its nearly $1.4 billion in debt.
It its latest quarter, the company narrowed its losses to $8.13 million from $9.72 million a year earlier, while revenue dropped 1.4 percent to $234.3 million. Last year it posted revenue of $1.03 billion, up from the prior year.
Atlantic City's casinos are being clobbered by competition from Pennsylvania, Connecticut and upstate New York, and by local no-smoking laws that have cut into attendance, say industry sources.
Last month was one of the worst Aprils on record for Atlantic City's dozen casinos, down an average 10 percent, with Trump Marina off 13.2 percent, the Trump Plaza down 12.6 percent and the Trump Taj Mahal down 19.6 percent, said the New Jersey Casino Control Commission.
Reprinted from New York Post
Our take on the news: Great news for everyone. Trump gets himself out from underneath a real difficult industry. Shareholders benefit from the increased share price of a possible buyout. The acquiring equity firm will give its full attention to bringing this investment to its full potential. Win... win... situation.
Monday, May 21, 2007
Hearings in Congress a bust on equity firms
The New York Times notes that the House Financial Services Committee's hearings on private equity's effects on workers and firms were a bit underwhelming. Only about 10 of the 70 members even showed up. Apparently, the testimony and discussion were pretty uninspiring. So it seems that taking on the private equity industry doesn't have legs as a major political issue. One might think the Democrats would take a populist stand, but most of the top firms are based in blue states, so maybe not. I doubt we'll ever get around to taxing the carry, which wasn't even discussed.
Our take on this news: In typical Government fashion, since many politicians campaign funds are from these financial sources, nothing concerning the health and improvement of the public marketplace will be done. The small investor is forgotten. We have no confidence in this Congress.
Our take on this news: In typical Government fashion, since many politicians campaign funds are from these financial sources, nothing concerning the health and improvement of the public marketplace will be done. The small investor is forgotten. We have no confidence in this Congress.
IPO's off to a good start this year
There has been a lot of angst as of late about whether the U.S. was losing its financial dominance. A huge issue is whether the IPO market has been harmed by Sarbanes-Oxley. Turns out that the pace of deals this year is off to a good start. In the usually quiet first quarter, deals hit a seven-year high: 64 deals for $12 billion, led by financial services firms. The Nasdaq beat the New York Stock Exchange in volume for the first time in three years by one measure. The Nasdaq raised $6 billion from 39 deals. The NYSE raised $4.7 billion from 11 deals.
Our take on this news: This is good news for the health of our economy and confidence in the equity markets.
Our take on this news: This is good news for the health of our economy and confidence in the equity markets.
TIBB rumored to be takeover candidate
After weeks of speculation that a suitor may appear for TIBB, a financial institution based in Naples, FL because of shareholders disappointment with present management, under-performance of the company and share price. The street chatter is that Minneapolis-based businessman Richard Christenson and associates have been lurking in the background and possibly accumulating stock in TIBB. Christenson, a deep-pocketed financier and well-known shareholder advocate has a reputation to apply pressure on management to create value.
Our take on this news: Christenson might be management's best friend or their worst nightmare. Either way, we suspect the real winner's here will be shareholders.
Our take on this news: Christenson might be management's best friend or their worst nightmare. Either way, we suspect the real winner's here will be shareholders.
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